Airtable's 80% off value crash: VCs explain why it's still a win | E2321

This Week In Startups is made possible by: Vanta https://www.vanta.com/twist Agree https://agree.com Odoo https://Odoo.com/twist Today's show: *Airtable just sold for $2.25 billion, an 81% drop from its peak of $11.7 billion. On this week's TWiST VC Roundtable, Aditya Agarwal (South Park Commons), Niko Bonatsos (Verdict Capital), and Rick Heitzmann (FirstMark Capital) break down why the venture world sees this as a good outcome, not a financial disaster. By declining the deal, would Airtable's team have just been delaying the inevitable? Is the fact that they reached $400M+ ARR on its own a reason to celebrate? Find out why our investor panel prefers unwinding a stuck situation rather than chasing a growth rate that's no longer sustainable. PLUS Robinhood's booming prediction market business, the secondary market flap over Anduril shares, why so many VCs shy away from "vice" categories, and a glimpse at how insiders are talking about the Apple-OpenAI lawsuit. Guests Aditya Agarwal on X: https://x.com/adityaag South Park Commons: https://www.southparkcommons.com/apply Niko Bonatsos on X: https://x.com/bonatsos Verdict Capital: https://verdictcap.com/ Rick Heitzmann on X: https://x.com/rick FirstMark Capital: https://firstmark.com/ Relevant Links Airtable: https://www.airtable.com/ Bending Spoons announces Airtable acquisition: https://investors.bendingspoons.com/newsroom/bending-spoons-agrees-to-acquire-airtable Constellation Software: The Anti-Conglomerate: https://www.eaglepointcap.com/blog/constellation-software-the-anti-conglomerate Introducing Robinhood Ventures Fund II: https://robinhood.com/us/en/newsroom/introducing-rvii/ Quartz: Robinhood posted record quarterly revenue: https://qz.com/robinhood-record-revenue-prediction-markets-earnings-073026 Riot Games: https://www.riotgames.com/en AngelList's USVC Fund: https://usvc.com/ Baseten: https://www.baseten.co/ OpenEvidence: https://www.openevidence.com/ Hermes Agent: https://hermes-agent.org/ Granola: https://www.granola.ai/ Timestamps: 0:00 VC intros & Bending Spoons buys Airtable 9:19 Why growth is the only metric that matters 9:45 Vanta - Get $1000 off your SOC 2 at https://www.vanta.com/twist 20:52 Agree.com - Stop chasing invoices and automate your entire contract-to-cash stack. Go to https://agree.com and tell them Jason sent you to get 50% off for life! 26:25 When should VCs sell in secondary markets? 30:55 Odoo - The all-in-one business platform. Get started for free at https://Odoo.com/twist 35:38 Robinhood's prediction markets are exploding 43:13 The USVC-Anduril secondary controversy 46:18 How VC firms use open source models 58:43 Telling the real founders from the grifters 1:02:38 Why Apple is suing OpenAI Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.com Check out the TWIST500: https://www.twist500.com Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp Follow Lon: X: https://x.com/lons Follow Alex: X: https://x.com/alex LinkedIn: ⁠https://www.linkedin.com/in/alexwilhelm Follow Jason: X: https://twitter.com/Jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis Check out all our partner offers: https://partners.launch.co/ Great TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland Check out Jason's suite of newsletters: https://substack.com/@calacanis Follow TWiST: Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin Instagram: https://www.instagram.com/thisweekinstartups TikTok: https://www.tiktok.com/@thisweekinstartups Substack: https://twistartups.substack.com

• 0:00Speaker 00

  Obviously, a lot of hand wringing about the SaaS apocalypse over the last couple of years. The indigestion in our industry of what would happen to these companies that were decacorns, unicorns. I guess we're going to start getting that answer.

• 0:11Speaker 01

  Private cap tables are only engineered to go up and to the right. They're not engineered to go down.

• 0:17Speaker 02

  The only thing that matters in our industry for venture kind of capital is growth rate. Nothing else matters. It's not profitability. It's not cash flow positive.

• 0:26Speaker 03

  A lot of these companies which have become zombies, even if they were decacorns, they're just chewing up people's time and hoping against hope.

• 0:34Speaker 00

  Interesting playbook, which is to cut 80% of the staff, put young people in charge of these products or services, from what I understand, and run them AI first for profitability.

• 0:43Speaker 04

  This Week in Startups is brought to you by Odoo, the all-in-one business platform. Your first app is free. Get started today at O D O O dot com slash twist. agree.com. Stop chasing invoices and automate your entire contract to cash stack. Go to agree.com and tell them Jason sent you to get 50% off for life. And Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a SOC two report fast. Get $1,000 off for a limited time at vanta.com slash twist.

• 1:16Speaker 00

  All right, everybody. Welcome back to This Week in Startups. It's our VC roundtable, which we do every Wednesday here on the program. It's August 5th, 2026. We've got just tons of news to get through and a great panel again with us. Nico Bannastis, founder, managing director, Verdict Capital. How are you doing? It's been a while.

• 1:37Speaker 01

  Been freaking great.

• 1:38Speaker 00

  No longer at General Catalyst. Yeah, that was the previous gig.

• 1:41Speaker 01

  Correct, yeah. Excited to be on this panel with you, Rick and Aditya.

• 1:45Speaker 00

  Yes, also with us, Rick Heitzman is here. Co-founder, partner, first mark Capital, Pinterest, Airbnb, Discord, DraftKings, tons of great unicorns in the portfolio. How are you doing, Rick?

• 1:57Speaker 03

  I'm doing great. Great time to be a New Yorker.

• 1:59Speaker 00

  Yeah, lots of good stuff going in New York, democratic socialism.

• 2:04Speaker 03

  Side of the political side, lots of winning between the Knicks and the World Cup.

• 2:08Speaker 00

  Did you get to see any of the Knicks games?

• 2:10Speaker 03

  I did. I saw you at one of the Knicks games.

• 2:12Speaker 00

  Oh, right.

• 2:13Speaker 03

  Yeah, it was pretty great. Actually, the energy in the city was awesome.

• 2:18Speaker 00

  It's pretty great. I got to go to the closing games of every series. That was my goal. So I went to nine games with my brother and some other friends. Sack courtside at a couple of them. Now, can't get courtside at Madison Square Garden. It's just like, literally, no matter how much money you have, you just can't even get them because they're for the Knicks alumni now and celebrities. But I was able to, Ben Stiller and I chipped in and we got a pair of tickets for Philly for the closing game. I got Atlanta courtside. Yeah, not bad, not bad. I couldn't get Spurs courtside either. They blocked us at the Cavs and they blocked us at the Spurs from buying courtside successfully, in fact.

• 2:59Speaker 03

  Still have next year. Run it back.

• 3:01Speaker 00

  Oh, God, it's so great. So great to have the Knicks win.

• 3:05Speaker 00

  And Adit Aragwal is here. Co-founder, general partner at South Park Commons Gamma, sponsor of This Week in Startups, Luma Labs, Render, formerly CTO of Dropbox, early engineer at the Facebook Corporation. How are you doing?

• 3:21Speaker 02

  Great to be here. Excited to be part of the panel.

• 3:24Speaker 00

  We are starting to see acquisitions, which is great. We're seeing IPOs. The wrath of Lina Khan has ended. The four years of no M and A is over and now we're starting to see M and A. Unfortunately, some of it's a bit lower than maybe the last mark of some of these SaaS companies. And we had a major, major acquisition just this week. Bending Spoons, which is a firm that buys distressed assets or I would say maybe sideways assets, slow growth companies. They're an Italian conglomerate and they like to pick up assets that have product market fit,

• 4:06Speaker 00

  but maybe aren't growing violently and maybe that the venture community has either given up on or lost interest in. They bought AOL, meetup.com, tons of other brands, and they seem to have a pretty interesting playbook, which is to cut 80% of the staff, put young people in charge of these products or services, from what I understand, and run them AI first for profitability. They just bought Airtable for 2.7x ARR. The company's price and valuation peaked at 11.7 billion. The current equity value on the deal was 2.25 billion. So obviously 80% discount.

• 4:47Speaker 00

  That put the enterprise value at about 1.2 because they had apparently a billion dollars in cash.

• 4:54Speaker 00

  They had raised 1.4 billion to date. And so that created a lot of back and forth, Nico. I don't know if you had exposure to Airtable, but maybe your take on this deal. There was also a wrinkle that the AI first product they were working on was spun out of the company before this deal was done. And I guess that's a spin out. No indication if that was, you know, given 50 million or $100 billion in seed funding. So I think there's a lot of contours of this deal that have to be worked out. But obviously, a lot of hand wringing about the SaaS apocalypse over the last couple of years. And finally, the indigestion in our industry of what would happen to these companies

• 5:38Speaker 00

  that were decacorns, unicorns. I guess we're going to start getting that answer. Yeah, Nico?

• 5:43Speaker 01

  Yeah, absolutely. Yeah, I don't have any exposure and this company did meet how in the past. It's actually really impressive to have gone so far as they have. Like how many companies, right? Really get to the 400 million plus revenue run rate? Like, that's something for anyone with like a founder, VC, startup ecosystem for this one to celebrate. Yes, they were darling during the very good times, rightfully so, because they were growing. And whenever you see this magical concept of multiple expansion, oh my God, you know, like everyone gets so excited. You pile in, you basically pay ahead for like two, three, five, 10 years. And then, you know, we've been around now for a little while.

• 6:26Speaker 01

  Some of you longer than me, multiples compress and reality hits us. And kudos to them to having the courage, actually, to have this transaction. Because as you know, private cap tables are only engineered to go up and to the right. They're not engineered to go down. So kudos to them that the team had the courage to do the AI stuff. And then they needed to part ways with the part of the business that is the bulk of it, but it's not very viable today. And I'm glad that Bending Spoons exists and all of us that have legacy portfolios could take advantage of this situation. Some founders, of course, might decide to persevere. And two, three years down the road, if the multiples increase in that sector, who knows? They could live for another day. It could be higher.

• 7:11Speaker 00

  Aditya, what is your take on, I guess, the multiples that we saw at that time? Many of us said, and you alluded to this, Nico, that we were maybe suspending disbelief as a community, giving things 50, 100 times forward-looking revenue. There was massive competition to get into these deals. And maybe the terms weren't even that favorable or even have any kind of protections for those late-stage investors where they would get a liquidation preference. In other words, you know, at least twice their money back. These kind of things were left out in a competitive environment.

• 7:51Speaker 00

  And this seems to be an incredibly, this seems to have been founder-friendly terms. But when the sale happened, now everybody's like, oh my God, the founders didn't get a good deal. So maybe you could help us understand what happened during that period with the different right sets that you saw maybe game on the field? And then did the founders and did the employees get screwed here? Or is this like a good enough outcome for everybody?

• 8:17Speaker 02

  Yeah, so I think all the valuations peaked in 2021. This was kind of peak COVID. A lot of these SaaS companies were essentially getting term sheets. You know, the classic kind of term sheets within 24 hours at 50, 70x kind of forward multiples.

• 8:31Speaker 02

  I think, looking back, I think all of us can say that those are probably too high a multiple if you can't keep up the growth rate, right? My big takeaway from this, you know, for me, by the way, we were an early investor. We're very happy for Howie, very happy for Andrew. We're very happy for the team that kind of has, you know, built a great product. But if you're at 400 million in ARR, growing 20%, having kind of raised 1.4.

• 8:59Speaker 02

  Billion. I mean, you know, in some ways, this is actually a reasonable price for the company. If you're gonna think about it, if you take a step back and you kind of look at it more objectively, this is not a crazy outcome for the company, kind of given uh kind of the sequence of events that have happened. But I think that um the big takeaway for me is the one that we learned at Facebook very early on. Is that I think that the only thing that matters in our industry for venture kind of capital is growth rate. Like we, it, nothing else matters. It's not profitability, it's not cash flow positive. It's not kind of like, do you live to see another day?

• 9:31Speaker 00

  Why is that? Why is growth rate so important in venture? I mean, obviously, I know the answer, but I'm I'm asking for the for the people listening here.

• 9:38Speaker 02

  Um.

• 9:39Speaker 00

  Why do VCs care so much about that growth rate?

• 9:41Speaker 02

  Because I think that if you're in it. They're suckers for growth, exactly.

• 9:46Speaker 00

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• 10:29Speaker 00

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• 10:50Speaker 02

  But I mean, if you just do the math, right? I mean, if you're growing at forty five, fifty percent year over year, and you manage to kind of pull that out uh for maybe even seven to eight years, you've basically quadrupled, maybe quintupled essentially your uh your valuation. And not so your valuation, you're kind of like revenue, uh which then obviously has knock-on effects, assuming that your gross profit margins, your gross margins kind of stay equivalent, which for Airtable were always high, right? Airtable was always a pure software, kind of a beautiful kind of company in that sense. But there's a huge difference between even forty percent growth and twenty percent growth, right? Like the, just as, you know, uh exponentials are beautiful on the way up, they kind of kill you on the way down as well.

• 11:32Speaker 00

  Yeah, in one case, you're doubling every two years. The other case, you're doubling every essentially three and a half, four years. That's a major difference. And entry price matters. When did you invest in Airtable? What was your like entry price ballpark? And then how does this sale work out for you? Yeah.

• 11:48Speaker 02

  We were close to like, I think, a series A, series B. So I think we did okay, you know? Um, yeah, I think it's a reasonable outcome. But even if you kind of look at somebody who came in at the series A or series B, what you're really underwriting is kind of a hundred X from there, right? To kind of like make the venture math work out, to kind of make it work out for your fund. So um I think the kind of the flip side of this is venture capital is kind of brutal if you don't grow. Like, you know, everybody who's underwriting something at the A or the B, you have to be underwriting as high a growth rate as you can. And um I do agree with Nico that there is courage in actually pursuing this outcome instead of frankly, just kind of drawing it out for another five years and keeping on taking shots on goal.

• 12:32Speaker 02

  Um and keeping on trying to figure out how to juice the growth from here. So I do think there's courage in this, but obviously some disappointment for the late-stage investors and so on. But I suspect that's also the game that, you know, they were playing at that point.

• 12:45Speaker 00

  There was the game on the field. Yeah, the game on the field, Rick, was.

• 12:50Speaker 03

  Money was free.

• 12:51Speaker 00

  Money was free. Look, we were in that Zerp era. And we also had, Rick, I think, a belief I heard from a lot of VCs is, hey, the worst-case scenario is I get back my money because this is a great company. It's a great founding team. And that's exactly what happened here to the late-stage investors. They got to place a bet with a floor. And the floor was, hey, I get my money back in five to ten years, which isn't the end of the world for a venture firm. Uh so your take on this outcome?

• 13:18Speaker 03

  No, and that's what happened. The later-stage investors got their money back in five years. Again, not the end of the world, but a lot of those growth funds are actually gonna lose money from that time. So this is not gonna be their worst deal, hopefully not be their best deal either. But they're getting their money back. The early-stage investors have a decent outcome. And I think the most important thing people haven't talked about for the founders and even the investors is time, right? You know, a lot of these companies, which have become zombies, even if they were decacorns, you know, they're just chewing up people's time and hoping against hope. The right thing to do is move on, you know, say, hey, we have a decent offer. We're not growing the way we thought. Bending spoons is is the acquirer of choice for a lot of these deals.

• 14:03Speaker 03

  Move on, sell to bending spoons or someone like that. Recycle your time, recycle your capital into something that you're really excited about.

• 14:11Speaker 02

  Particularly time right now, when you think about the hyperagents kind of spin out that happened, you know, as part of this. The biggest issue right now is that the next two or three years are kind of the, kind of a beautiful period. It's a Cambrian explosion of opportunity. So if you're talented, if you're Howie and you're talented and you're trying to figure out how to make this thing, that it's just really hard to kind of like re-accelerate the growth rate versus trying out something that hopefully can be a more seminal shot on goal. You know, that kind of makes sense.

• 14:41Speaker 03

  And that should make sense for all of the founders of that era. All these guys who are breaking their pick, trying to go from eighteen to twenty-four percent growth rate. Maybe that that's not the best use of their time and talents. Best use of their time and talents is to say, all right, we played this game. It didn't work out as possible. Let's play a new game.

• 14:58Speaker 00

  Nico, the idea of trying to do this on the same cap table is a flawed concept. That's what I saw a lot of people talking about. Well, why don't they just manage the business like bending spoons is gonna do for profitability? And then build a new business inside of it, which they were doing with some new AI product apparently that they spun out. Maybe you could explain to the audience why that doesn't work with a calcified cap table?

• 15:22Speaker 01

  Really hard to do, because like when you've hired people, when things were uh happening and everyone was positive and optimistic and the growth rate was high, as Aditya was saying, the multiples were like nuts because people were playing the game on the field, as Rick and, you know, you, Jason, were saying. Uh those are not the same of people that can basically, over the next year or two, would just need to slow down, shrink, play defense, and try to optimize private equity style, get the profitability up, uh get it to be like steady uh growth, but leave for another day. Those are not the same kind of people. Often, a lot of this like calcified cap tables,

• 16:04Speaker 01

  what you also have is like founders who took a lot of money off the table in two thousand twenty, twenty-one, twenty-two. And they might not even be as motivated, might not be as hungry. Also, we shouldn't forget, during that time, there was that crazy anthropological experiment that everyone was forced to go full remote. And you raised all this money, you hired all those people. The growth rates and the multiples came down. You have like fifty million sitting in your bank account in two thousand twenty-three, and you're like, oh shit. I'm working in a company that is not growing quickly with a bunch of people that we've hired all over the world that I don't know who they are. I don't know where to get started.

• 16:46Speaker 01

  And as Aditya's saying, oh my God, this chad G P thing sounds intellectually interesting. So what do I do, you know? So.

• 16:54Speaker 00

  It's such a great framing, Nico, because uh we all know, like, remote work just doesn't work for eighty percent of people. And it doesn't create the proper hard-driving culture. Any VC who's been at this, you know, game for any period of time knows that it's like worked once or twice in history. Okay, fine, those are the exceptions that make the rules, but I think that's a real insight. And then so is Aditya taking money off the table. This has been a controversial move, and VCs were told it's founder-friendly to let founders take that, you know, ten, fifty, even like in the case of that conference software, I forgot the name of it. They took two hundred, founder took two hundred million off the table. Hoppin', we all know it, right? Like.

• 17:39Speaker 00

  We all saw that happening and we're like, what is that going to do to people's motivation? If they've already gotten rich and they can, you know, the way I say it is like, once you can buy an airplane for cash money, not a jet card, like jet card kind of money. Okay, that's 500K a year. But when you can spend 2 million a year and buy a $10 million plane or $20 million plane, that's when the founders totally going to be distracted. I don't know any founder or human who can.

• 18:07Speaker 01

  For what it's worth, I'm curious if Rick and Nico would agree. I haven't seen that many founders, especially over the last three or four years, take out that kind of money, right? Like, I think a lot of it is really like, let me kind of like, put down a mortgage on a house. Let me kind of like, at least be able to like, have that baseline.

• 18:24Speaker 00

  5 million, 10 million is what you're saying?

• 18:27Speaker 03

  Maybe not even.

• 18:28Speaker 01

  But I haven't, not even, yeah.

• 18:29Speaker 03

  We've seen a couple million bucks of, here's a, here's a couple million bucks to let the, let everybody make the round work and gives, gives people money to put a down payment on a house, feel a little bit more comfortable and play to win because they still own.

• 18:44Speaker 01

  This is what, this is what Mark did for us at Facebook in 2007, when we had our first secondary sale, everybody was allowed to kind of do about like a million or two in secondary. And it allowed basically all of us who were early employees to buy a house. That was it. So you can buy a house in San Francisco, at least put the down payment.

• 19:01Speaker 00

  Back then, keep in mind, that was 15 years ago.

• 19:04Speaker 01

  Can you believe it, guys? I bought a house in Noe Valley for like, you know, like, you know, a million and a half dollars. Exactly. Um, yeah, preanthropic.

• 19:13Speaker 00

  And I'm fascinated by this business. I might be tempted to back it as a venture capitalist, is these roll-up companies. There is Constellation, I think, that's doing this. There's some SaaS group. There's other folks who are involved in this. And I guess Thrive Capital is doing roll-ups of legacy businesses. Have you looked at this?

• 19:33Speaker 03

  We have. I know the guys at Constellation well. They've actually been doing it for close to 30 years. Canadian company and they're, one of their models is, hey, we'll pay one times revenue. We'll crank up pricing, we'll, we'll take out the employees. And if you look at it, it's a public company that's really compounded over the last 20 years. And Bending Spoons is doing the same model. I think those guys have done a great job. You know, frankly, part of the model is we're willing to do the hard things that maybe your VC board members wouldn't do. We're willing to make the cuts, implement AI and increase prices. So if you look at a lot of these companies that they've acquired, they've increased prices 100%,

• 20:16Speaker 03

  200%, they've taken the costs out and they've turned it into a very, very, very profitable business in a way that, you know, might have been left for dead in the legacy world. Clearly AOL was left for dead, but even companies like Airtable, which have a pretty vibrant customer base, they're going to be able to run the same playbook. I think that, you know, what Thrive or GC are doing is very verticalized. You know, they're looking at the accounting sector as one of the places they're doing roll-ups and being able to implement AI there. So it's, it's a slightly different version of the same thing where maybe you're doing a little bit more financial engineering than a normal venture capitalist would do.

• 20:52Speaker 00

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• 21:34Speaker 00

  99.64% of all invoices on the entire platform are paid within just 10 days. So if you want to stop chasing invoices, go right now to Agree.com and if you tell them Jason sent you, you're going to get 50% off for life. Uh, let's pull up the Constellation software ticker, guys, and take a look at that. I, I think this is an interesting concept. I know we have apps and they've done incredibly well, making tens of millions to hundreds of millions of dollars of revenue. And, you know, app businesses are pretty easy to run. There's Constellation software. Let's put it at five years and just take a look as opposed to one day. So we get something a little more.

• 22:13Speaker 03

  If you do the, do the max and it'll just show.

• 22:16Speaker 00

  Max.

• 22:16Speaker 03

  It's one of the, one of the prettiest charts you'll see. Reverted a little bit, but you know, from, they went from, uh, I, I guess that's about 100X from, uh, you know, at, at one point in 2000 to 2024.

• 22:31Speaker 00

  Yeah, do all again, gentlemen. Let's take a look at that all chart here. Yeah. If you go to 2000, uh, it looks like it's had an incredible roll-up and could have been.

• 22:40Speaker 03

  Even Bending Spoons is up 40% from its IPO. And then they, they also had the courage to go public a week after SpaceX, when everyone was afraid that SpaceX would suit, would take all the oxygen out of the room, all the capital out of the room, all the press out of the room and no one would care about IPOs. They went public, you know, that next week. And I think they've traded up, yeah, about 40%.

• 23:03Speaker 00

  Market cap currently at 30 billion, basically. And yeah, so this would be a pretty meaningful acquisition for them. 3% of their market cap, 4% of their market cap. What a great, interesting business. Another issue I think a lot of us face, Nico, was founders or boards saying, hey, please don't sell in secondary with the founders, uh, you know, please go long, et cetera. If you were in Airtable and there were five, six, seven, eight, nine, 10 billion dollar offers coming in for secondary, it would have been wise to maybe pair your position. So I'm curious if there's a lesson there too as well for VCs. And then maybe we could all talk about what our philosophies are on secondary sales when we hit certain benchmarks in our

• 23:48Speaker 00

  investments, Nico.

• 23:49Speaker 01

  Yeah, I think that's a great topic to discuss and I'm sure all of us have like, um, uh, views. The world is changing, like the, the whole private market universe is getting to be much larger than before. The venture capital industry is getting to be much bigger. There's stratification of different folks, angel, super angel, solo GPs, blue ocean or ping ocean or red ocean of micro VCs, a lot of legacy firms, venture capital banks, crossover folks. So now I think it's a lot more clear for a lot of the smaller folks to be selling

• 24:29Speaker 01

  to the next, you know, like, uh, people in the food chain. So if indeed you're somebody who invested in the first money round, the pre-seed round, the seed round, the series A round, and back in the day, like in the nineties, when you guys, you know, got started, Jason or Rick, uh, you could go public in four years. Uh, when I started in venture capital in 2009, 2010, we were underwriting, okay, you know, this company is good, go public in like five to seven years. And now many companies won't go public until like, you know, in this case of SpaceX, 20 plus years later. So if you just have that in this new reality in mind, makes sense. Somebody who invested, well, year one, year two.

• 25:13Speaker 00

  So what do you do? Do you try to pair your position and what percentage do you try to sell, Nico, along the way? Do you have, do you have a stated philosophy internally at your firm?

• 25:22Speaker 01

  Yeah, I would say, I would say to you, yes, there's the art of investing. There's also the art of selling. So we do first money investing at Verdict. That's the only thing we do. We're investing freaks. We're building in new markets and we are like the very first investor. Uh, and yes, um, if we're sitting on 100X or TVPI and/or the founders are selling 20 to 50 million in each round, and you know, the investors are going to be a sovereign founder, very large final frontier, final boss corporate, we are going to be asking ourselves every quarter. So we'd trim five to 10% on the way up. Because in this big rounds, normally, here's what happens. There are going to be people who either didn't care about it or missed out or lost the opportunity,

• 26:06Speaker 01

  who two months later are going to be so freaking, you know, hungry to get in. So you're doing a service to the founders because you're making the market for the next, next round. Um, whoever, you know, missed out is excited to buy. And the people who just invested are like, oh my God, look, we picked the right company. Already got like a small pseudo markup in the secondary market.

• 26:29Speaker 00

  Did you, how do you think about it?

• 26:30Speaker 01

  Get incentives right.

• 26:32Speaker 00

  And do you have a, do you have a playbook now that you're deploying and you have to communicate this as well to your LPs? So I'm curious, do you get pressure from your LPs when you're raising your fund or discussing with them like, hey, uh, are we going to clear and move any of this TVPI to DPI, uh, and that in relationship?

• 26:49Speaker 01

  Right. I think it's a great question. You know, I think that having just gone through a fundraise cycle, we just actually announced our fund for raise this morning. So, you know, obviously a lot, thank you, everyone. Yeah.

• 26:59Speaker 00

  Not easy to do.

• 27:01Speaker 02

  It was great. You know, Fund Four, we just launched it. Five hundred and seventy-five million. Meaningful step up from Fund Three, which was about two hundred and seventy. And I think a big part of the reason why LPs were excited about kind of Fund Four is because we had shown TPI for Fund One, and we're starting to show TPI for Fund Two. And our take is that, you know, all of this venture capital markups are nice, but at the end of the day, our job is to return money back to our LPs, right? My take is that Nico kind of nailed it. I don't think, you know, if you'd asked me when I started SPC Fund, I would have said, oh, there are only two instances in which we make money. Either the company goes IPO or a company gets sold, and I'm maximally founder friendly, right? Because that is, you know, I'm not trying to do anything, but the world is very different today, right?

• 27:46Speaker 02

  Like, you know, the number of public companies in America has gone down by twenty percent in the last decade. People don't want to be public. It kind of sucks to be a public company. So the way we approach it is actually to try to be maximally transparent about what our algorithm is with all parties, right? Which is that we are first money in, so obviously we're not going to sell in the first round after us, the second round, or hell, even the first three or four rounds, right? But when it comes to the later stages, assuming that it is a sanctioned sale where people are participating, it is kind of like a, hey, we're doing a round, people can sell some. And we have a formula. If we can sell fifteen percent of our position, let's say, to return, you know, like one turn or half a turn of the fund, right? Then we are going to pursue it, right?

• 28:31Speaker 02

  And we like it to be formulaic because I think that I don't want to have to constantly be testing the secondary markets to figure out the exact price. It's just exhausting, right? To kind of go and deal with all of the brokers and the... So I'm more like, if the sale is happening, it's sanctioned by the company. If I can sell twenty percent of my position, return kind of like zero point five X kind of DPI to my LPs, I'm going to do it, right? It's not kind of a huge debate.

• 28:56Speaker 00

  Which is like a great, it's great that you actually have codified this. And that's actually, I think, the big difference than five years ago. If we, if I were to ask this question five years ago, people would be like, yeah, we're long and we want to be founder friendly, Rick. Now, I think after the last two cycles, and as our other guests have talked about, Rick, hey, we're extending to fifteen or twenty years before IPO, or in Stripe's case, maybe fifty years or never for their IPO, it seems. You kind of have no choice, right? But to have a philosophy.

• 29:24Speaker 03

  And, you know, the difference is being, as a venture manager now, is you become more of an investment manager, right? It was easier to sit and buy and hold forever because you knew forever was only going to be several years to a sale or IPO. Now for, now, sit and hold, it could be thirty years in Stripe's case. And you can't do that with funds that are ten to fifteen years long. So you actually have to make a much more active decision to be not only a buyer, but a seller. So, you know, having that, and then like every other, you know, relationship, the most important thing is communication. So being able to communicate that to the entrepreneur, saying, hey, here, here, here's where we play.

• 30:04Speaker 03

  Here's where we might want to get off for a little bit. If you have some excess or, and, you know, especially if you're getting ready to go public and there's some excess demand, you know, you might rather have more Wellington, more fidelity, more long-term public capital on your cap table than a seed fund who, you know, is going to be up a hundred X in the IPO and is holding their breath till the lockup. As opposed to someone like a BlackRock or Fidelity who's looking to double down on the IPO. So this is staying public for, staying private longer has basically changed the game. And therefore, you know, you're, you're going to have to manage in those rails. And part of talking to the entrepreneurs is, hey, here's the new game being played.

• 30:48Speaker 03

  You used to have to transition your cap table only in the public markets. We can help you transition that cap table in the private markets.

• 30:55Speaker 00

  If you've got a company, you probably have a tool for invoicing and one for running your website. And then finally, you got one for your CRM, of course. And somehow, even with all these time savers, you're still moving data around by yourself at ten PM? That's why here at Twist, we recommend Odoo, O D O O, the all-in-one management software that's already serving sixteen million users across more than a hundred seventy thousand companies. Think about that. They're bringing everything you need into one platform. That means your CRM, your sales tools, accounting, manufacturing, your website, inventory, and of course, your point of sale. If you have a point of sale, all right where you need them, and they're all in constant communication with each other. No more logging every change order or new sale across three different apps.

• 31:36Speaker 00

  And the dreaded spreadsheet as a database. No, you make a sale and your invoice gets created instantly while your inventory gets quickly updated. So if you're still combing together your back office across five different tools and apps, get started today at Odoo.com/twist. And your first app is free. That's O D O O dot com slash twist. Two situations where we did sell, and my philosophy is like, once we hit fifty X on the investment, twenty-five, fifty, or hundred, because we are first money in as well. We're going to pair ten or twenty percent, and then at the next turn, we hit a hundred, two hundred X, we're going to pair another ten or twenty percent. Did that with a consumer company, and I just sold the founders. We're parry pursue with you. They were like, all good. Did it with a SaaS company that hit a billion. That's probably now worth less than a hundred million.

• 32:21Speaker 00

  Cleared eighteen million dollar position, was one of the best, you know, distributions we ever had as a firm. And they asked me, please, please, please, please do not sell. And I said, we have a contractual right to sell alongside you. And we have a contractual obligations to our LPs who we told we would do that. So if you guys are selling, we're selling. If you're not selling, we're not selling, but we're doing a parry pursue, the exact same as you, and they took that well. Fast forward now to today, I have a couple of investments now, two hundred X, three hundred X. And there's not an opportunity to sell on the cap table officially, but there are these brokers.

• 33:01Speaker 00

  And that is, as you correctly pointed out, a very dangerous place to play because the brokers in some cases are complete utter boiler room scumbags. I'll just say it outright. There are some that are kind of legit. There are some that are legit. There's, I, I think the majority that are boiler rooms.

• 33:21Speaker 02

  I think a lot of the secondary brokers, a lot of the kind of the SP, SPV peddlers right now, you just have to stay away from that stuff, right? And I think that's the stuff that frankly, founders probably rightfully get angry about, which is like, who are you putting indirectly or directly onto my cap table? Like, you know, and but as long as you can go to a founder, and I think you said it well, which is that if I can, you know, swap in basically a long-term minded growth investor who is kind of like good for your cap table, then I think everyone's happy.

• 33:50Speaker 00

  Yeah, that's, yeah, that was Rick's point, which was a great one. All right. Listen, we got a lot more on the docket to get to. Before I do that, let me take a moment to thank Harmonic, who is supporting This Week in Startups and these incredible roundtables. They're an AI-powered database. They got a ton of information on there in startups. They're refreshing it constantly. They put like an AI L L M around it. And it's not just like doing a simple database search anymore. You can source all these incredible companies, very simple. Let me show you what I did recently. I was in Japan and I told my team, you know, I'm really interested in humanoid robots because I was watching them fight in cages. I don't know if you guys have seen humanoid robots fighting cages.

• 34:34Speaker 00

  But I think this is going to become like the next UFC. And if they can fight in a cage, I think people are going to start buying these. It's going to replace boxing. We started doing some research here and there's like sixteen thousand units were sold in twenty twenty-five. That's going to triple this year. And I don't have any exposure to this. Unitree, obviously the biggest one. Then we asked it, hey, can you do this by how many are being shipped? Because we want to find new ones and we just keep having this conversation about all of this great data that you can only get. You can only get all that great data in Harmonic. So thanks to our friends at Harmonic. So visit harmonic.ai/twist, get four thousand dollars off.

• 35:15Speaker 00

  Company sourcing and monitoring, amazing deal, harmonic.ai/twist for four thousand dollars off. All right. Let's keep moving. Robinhood now earns, I was a pre, a free launch investor in this company. They're now earning more from predictions than stock trades. This is pretty amazing. Robinhood Prediction Market originally launched in March twenty twenty-five. Prediction Market's now its second largest business line, only behind options trading. Options made three hundred forty-two million in revenue in Q2. Event contracts, Prediction Market's made a hundred fifty-six million.

• 35:52Speaker 00

  And so this is surging. Obviously, you got Calci and you have Polymarket. Robinhood, though, still relies on Calci for its underlying technology. I think, Rick, you're...

• 36:05Speaker 00

  Were you in DraftKings, am I correct?

• 36:07Speaker 03

  I was. I was an early investor in DraftKings. I followed this market for a while. And it's really opened up. And part of it was the opening up of the futures contracts. Instead of having to go state by state for a regulatory basis, that's opened up tremendously. Some of that's being pulled back by the AGs today, but you'll see. But obviously Vlad did an amazing job at Robinhood, having that tip of the spear of the low-cost trading to just get into all of these wallets, especially in a certain demographic with largely young men, and then being able to offer more higher-margin products. So I think that market's going to open up. It's going to become highly competitive. Obviously, Fanatics has announced in this market, DraftKings plays in this market,

• 36:52Speaker 03

  FanDuel plays in this market, and of course, Polymarket, as well as Kalshi. So you're going to see that same battle for the customer wallets that you saw originally in the sports betting world from about five years ago, and it's going to be incredible to watch.

• 37:08Speaker 00

  This is now, I think, when you made that first investment.

• 37:13Speaker 03

  Yes.

• 37:13Speaker 00

  How do you underwrite an investment in something that a lot of our LPACs, our agreements with LPs, don't allow us to go into Vice gambling?

• 37:23Speaker 03

  Yep.

• 37:24Speaker 00

  Adult content, OnlyFans, et cetera, or psychedelics, drugs writ large, but even some of them have valid uses and are being studied at Stanford and wherever, Johns Hopkins. So how does one underwrite that kind of investment and convince LPs, hey, we want to get into an area, some people might call it gray, some people might call it emerging or frontier. How do you, Rick, underwrite that with the LPs?

• 37:50Speaker 03

  We have active conversations with our LPs. We were the first investors in Riot Games, and we had some pushback that the name was Riot, and that's a really violent name. And therefore, maybe we should reconsider investing in a company known for a riot. And that wound up being the most popular video game through League of Legends over the last 20 years. And, you know, but as we thought about DraftKings, there was probably two things. When we first invested, when it was largely illegal, sports gambling was illegal in almost every state. You know, we had to say, we're starting in daily fantasy, and we'll only participate in the markets in states where this is legal. We're not going to play in the gray area. We're not going to try and do anything illegal, but we'll do the right thing.

• 38:32Speaker 03

  Then the issue came when the New York AG tried to shut us down. And they said, and the LPs came back and said, hey, wait, wait, remember you said you were only going to do things legal? It sounds like you guys weren't playing in the white area. You were playing a little bit in the gray area. What's going on? And we had to have the conviction and stand by our entrepreneur in Jason Robbins and say, we think they're doing the right thing. We think this is a mega trend, and this is going to become an important category, and we're going to stand by that entrepreneur, no different than, you know, what we did in Airbnb when that went through significant regulatory upheaval, no different than you did in Uber.

• 39:06Speaker 00

  Yeah.

• 39:06Speaker 03

  I think significant regulatory issues that, you know, we had to take a position of, we think this market's not in the gray area. We think this is going to be a very clear market in the medium term, and you're going to have to trust us.

• 39:20Speaker 00

  Nico, any thoughts on participating in, you know, things that maybe LPs, a lot of them in the Middle East, a lot of them on the East Coast, are just like, hey, no-fly zone for us. We can't touch this. We got, you know, whether it's the Jesuits, the Mormons, or anybody, you know, who's got deep roots into some of these philosophical no-fly zones. How do you look at emerging categories? Are there ones you want to participate in that can't? Or ones that, you know, you're particularly interested in here, but maybe you got to do it personally?

• 39:54Speaker 01

  Yes. As Rick said before, in the topic of like selling a secondary, it's all about communications, which is the case with all the relationships, right? So in our case at Verdict, we've said, we're not going to do anything that has to do with vices, like gambling, alcohol, cigarettes, et cetera, tobacco, et cetera. We also don't do any personal angel investing, like anything we do is like through the fund. We don't do any advising incubation outside of the fund, like none of that stuff to remove any conflicts. Now, from there on, there are new emerging categories, and that's our job. Like for all four of us on this panel, we do invest in new, new stuff.

• 40:35Speaker 01

  But sometimes it's not the cup of tea, especially it becomes more mainstream for all of the institutions. So that's where you need to be very clear with your communication, understand where they're coming from, and you can do carve-outs. It costs some more money on legal fees, but you can navigate that stuff if you have to.

• 40:55Speaker 00

  Didya, any thoughts on that? Or I want to talk about Robinhood's venture fund, too.

• 41:01Speaker 02

  I think we can, I think we can move on, but my take is that there's a lot of cool stuff to invest in. There's a lot of Vice right now. There's lots of kind of like, you know, new physical AI biology stuff to focus. And we just don't do Vice. We think that there's a bunch of new cool things out there. But I think, again, a recurring theme seems to be that early and constant communication goes a long way.

• 41:24Speaker 00

  Yeah, absolutely. Robinhood Ventures Fund 2, publicly traded, closed-end fund structure. This is a unique fund structure. It lets non-accredited retail investors buy into private companies. My understanding is then the fund managers, the GPs, don't get carry. They can't get carry. They get like a percentage of the assets under management. And obviously, this is nothing to a company of the scale of Robinhood. But I guess, I'll be pulling a string and seeing where it leads them. They're targeting 200 million in the IPO, New York Stock Exchange, August 13th. Maybe it'll go as high as 230 million. And their focus explicitly Y Combinator startups. So competing with the folks on this call to a certain extent.

• 42:10Speaker 00

  And they already hold stakes in 80 private companies, 2% annual management fee. And it says here, plus 20% of realized capital gains. Don't know if that's accurate or not. Have you looked at, Didya, these closed-end funds? And I think Naval and the team at Angel List have one as well. I think it's called USVC.

• 42:31Speaker 01

  They do, yeah. It's called USVC. You're right.

• 42:34Speaker 02

  Yeah, I mean, I think that I haven't looked into these closed-end funds too closely. But the sense I get is that, like, it isn't, the people who end up kind of being on the other side, the entrepreneurs, don't love it. Like, there was kind of a blow up, I think, just like two weeks ago, where I think there was something about USVC getting some stake in Anduril, and then Brian Shimp kind of called him out. And my takeaway was just that, this is kind of an example of just like, you know, the way I, as I understand it, it kind of makes essentially founders feel like they're not in complete control of their cap table. And it kind of just leads kind of, you know, it's just kind of icky to kind of like deal with, kind of in the current structures.

• 43:20Speaker 02

  And so I suppose that giving people more access to startups is kind of a good thing. I'm not convinced that this is the right mechanism, at least myself right now.

• 43:29Speaker 00

  What are your thoughts, Nico? In the case of the Anduril, it seemed to have been an LP in a fund that was early into Anduril. So their LP interest, which is their right to do, doesn't mean it gets recorded on the cap table of, you know, that startup. That startup has been pretty performative, maybe, or effusive in their engagement of SPVs, et cetera. They're an effusive group. They love to get invites online, I've learned. So Nico, your thoughts on the role of it? It looks like this is like another interesting opportunity for liquidity and for more access to venture assets. So I don't see it necessarily as a bad thing, even if there's some hand wringing.

• 44:11Speaker 01

  My point of view is like, it's always good for anyone involved, like founders, existing investors of companies, prospective investors in other companies, to have more options to like invest or sell. So clearly, there is some new legislation that lets this thing happen. And you see entrepreneurial minds like Vlad from Robinhood to go and seize the day as early adopters in that field, the same way that he did with the prediction market stuff, right? So when the times are good, and you have a lot of interest from family offices, retail investors to do stuff in startups, this kind of things will do well.

• 44:54Speaker 01

  Now, if the times are not good, the question is, what happens to all those investors? Because imagine you being a founder or on the board of a company where you have a long tail of investors who might be shielded from you through like a structure like that, but might be unhappy because you, this quarter, you missed revenue, or your reporting is not as great as it is, you know, for a public company. Like, you would have to do some of this management. So you've got to be a little bit, you know, thoughtful, who you want to let in and why.

• 45:26Speaker 00

  Yeah, Rick, any closing thoughts here?

• 45:27Speaker 03

  Yeah, no, I think access is good. Access is good for investors. It's just putting in a position that's not, it's not burdensome to the entrepreneur. And I think probably some of these later-stage startups, which are closer to liquidity, have more easily understandable models. And I know, you know, the Robinhood fund that had Anthropic and OpenAI and SpaceX had a great debut also, and it's probably even traded up. But, you know, I'm not sure, having them invest in a slate financing at YC makes any sense.

• 45:59Speaker 00

  Didya, let's talk a little bit about the massive number of open-source models that have emerged just in the last 60 days that Many people are reporting, are giving them results similar, maybe not as good to frontier models, but certainly good enough is what I keep hearing. These models are good enough. I'm curious what impact that's having on how you run your firm and then what you're seeing from entrepreneurs and how they run their startups. So let's start with going around the horn here. Has it changed how you're running your firm, you know, finding startups, managing startups, et cetera?

• 46:35Speaker 02

  Absolutely. So I mean, I think that one of the companies that we incubated at a VC about seven years ago was Baseden, which is one of the leading providers of these open source models. So just seeing the amount of usage these models are getting across most of the enterprises that we are familiar with. I'll give you a great example, actually. I think one of the things that's poorly understood is like, if you look at something like Open Evidence, right, kind of a phenomenal company, you think that you go to Open Evidence and there's like one call to kind of an LLM model. But in reality, when you hit Open Evidence, there's actually 50 different kind of instantiations of calls to like various models to run different

• 47:15Speaker 02

  parts of kind of like what they're serving. And right now, like 80 to 90% of the calls to within that Open Evidence, kind of one call trace, happens to open source models. So their usage is through the roof. Now, when you look at it internally, the way we look at our firm, everything from sourcing to helping us triage who to talk to, to allowing us to compile all of our feedback, to getting all of the context on these firms, everybody at our firm now has their own personal agent. At South Park Commons, no one has an executive assistant, but we all actually have multiple agents.

• 47:49Speaker 00

  What are you using? Hermes, OpenClaw, Clotcode?

• 47:53Speaker 02

  We actually have our own, we have our own harness that we have built from scratch. We actually have a team of six or seven engineers. We started off using Hermes, but then that, you know, ended up kind of having like catastrophic memory loss. But nowadays, we built our own harness. We actually multiplex between different models. Our favorite open source model right now is Kimi. And all these long horizon, kind of like running, kind of like models are fantastic.

• 48:17Speaker 00

  No, wait, did I hear correct? You have six to seven internal engineers working on a venture capital firm's tools?

• 48:25Speaker 02

  Yes. Yes, absolutely.

• 48:26Speaker 00

  How many people total in your firm?

• 48:29Speaker 02

  Thirty.

• 48:30Speaker 00

  Thirty. So is 15, 20% of your team, 20% of your team?

• 48:35Speaker 02

  Jason, this is incredible. I cannot, I mean, I'm an engineer. I, you know, I write a lot of code. As of this February, in our code base, we had about 100 commits in the history of our firm. Five months later, we have 5,000. All of our GPs have committed code almost on a daily basis, right? This is something I'm extremely proud of. And the thing that I keep on thinking of is the amount of leverage that it's added to all of us, right? In terms of our ability to go out and do the things that we do every single day. When you go out and you try to find great people to source, that number goes from like 15 people to like now maybe 50. The number of-

• 49:12Speaker 00

  Explain what that is, because that was the first one you mentioned. Sourcing deals? Who you source deals from?

• 49:18Speaker 02

  No, this is actually just like people who are, for instance, applying to South Park Commons to be a part of our community, right? Like our ramp has kind of like, our curve has essentially increased 50% year over year. Our firm has increased by 50% year over year. We're still the same size. The only way to handle that growth is through all of kind of like the AI capabilities we have built. Now, when we are able to now essentially go back and give detailed feedback to everyone that unfortunately we say, no, do we have a, we have a 1% acceptance rate for people to get in. Everybody who applies, we try to give them personalized feedback based on what we have seen. In the past, we could not do that. Now we actually have a shot of doing so, right? So up and down

• 49:58Speaker 02

  the stack, our, our desire and kind of willingness to use these AI tools is just kind of magnified tremendously. And here's the thing that I, that I think is the most interesting part. It is fun. It is fun to work with these AI models. You get to, it is actually a lot, like stuff that felt like a chore in the past, like having to go trawl through LinkedIn. Now you can actually just talk to your agent. You're kind of jamming on this thing. So I think there's a lot more fun in the part of the job that used to feel a little bit more routine, that I think all of us have tremendously enjoyed. We're all having the most fun that we've had in a long time.

• 50:31Speaker 00

  Same with me. Nico, any applications or wins for you personally as an investor and/or at the firm?

• 50:40Speaker 01

  I mean, look, it's amazing for us as a startup VC with like two people on the investing side to be covering so much ground that we, we would need like eight, 10 people before. Like at the moment, like you can, like you meet the founder, you ask that founder or some of the other amazing mentors or founders you know that you compare notes with. They would say Jack, Mary and Sally. Jack, great, we already know. Mary and Sally, we don't know. Boom. Your AI immediately does some research, you swipe right, call the email going out. Like this is incredible. Or you meet a company in the space you don't know

• 51:21Speaker 01

  much about, you can see the competitive landscape in like three seconds and then ask, it tells you, well, for Verdi Capital, I know that you need to pay attention to ABC compared to what you looked for before at your previous role. Like this gives you a lot more bang for your buck. Or I don't need to pay money to buy Melchimp. Boom. Now I have my own custom software version of it. Sure, it's not enterprise great, but does work for me. It's like, great.

• 51:50Speaker 00

  Yeah, the leverage, Rick, is unbelievable with these tools. Have you started using it internally at the firm? If so-

• 51:57Speaker 03

  We've used, we've used a lot of them. I'm not gonna, you know, we've done some of the things the other guys have said. One of the most important things is being able to pull in all the data around, around investment decisions. So, you know, we're, we're pretty big. We have a fairly decent sized partnership, principal level, investor level, and we actually have projects around each deal coming in, whether it's a new investment or a follow on, where it's not only just the deck that we might have sent around 10 years ago, or you know, the deck in our internal analysis, but it's every single granola for every meeting we've had with them, every other piece of advice. And that project is, you're able to collaborate with the project. So I only have to send you a note saying, hey, Jason,

• 52:40Speaker 03

  did you look at the competitive landscape and you heard of this company? The project's just going to answer it. So you, so you walk into any investment review with probably 10 to 20 times more knowledge about that company, that competitive landscape, and having your questions answered probably at a much higher level in real time, which is a lot more fun as opposed to, you know, sending out an email, waiting for you to answer. I maybe gave you a bad question. You maybe gave me a bad answer. So, you know, our, our purpose of our investment process is getting to truth as opposed to getting to an answer. And this helps us get to truth in a, in a lot more transparent way.

• 53:16Speaker 00

  All right. When we get back from this quick break, I want to talk about what we're seeing at our startups and how early-stage startups are deploying AI to run their companies faster, better, et cetera. Let me take a moment to thank Ro.co for helping me lose 40 pounds. You've heard of GLP ones. And yeah, listen, you see me now. I'm Shvelt, Shvelt J Cal. And maybe some of you are hesitating to get started on that weight loss journey. Maybe you're not in your insurance. Maybe you are scared of needles, even though it's a tiny little needle and you want to take a pill. Do at Ro.co/twist now, Ro.co/twist. And I decided internally to run a contest with editorial director Lon and my brother

• 53:57Speaker 00

  Jamie in sales. My brother Jamie's lost 20 pounds as well, and he is doing great. So we're going to talk about that weight loss contest we're having here on the show. Lon is going to get started on his Ro.co journey. If you're interested in that, go ahead and check if you have insurance that will cover your GLP at Ro.co/twist. All right, let's, let's go to the next issue, which is our startups are growing with AI. I have had a phenomenal experience in our accelerator and our pre-accelerator, which is called Founder University, with startups that have raised that 125K check for an accelerator, and then

• 54:37Speaker 00

  they just don't hire anyone. And their revenue goes up. And then we get to a million dollars in revenue and there's three or four people inside the company. Aditya, what are you seeing in terms of how founders are using this technology to maybe push off hiring somebody or maybe even, you know, two or three founders who are not developers or not great developers, being able to get product market fit with a two or three person team at less than 100K?

• 55:05Speaker 02

  So probably two, two separate parts to that answer, Jason.

• 55:11Speaker 02

  At South Park Commons, at least, we prefer to invest in highly technical founders. So my preference is to actually invest in companies where it's not easy to wipe code or kind of like to use these AI agents to kind of build version zero of what you have, right? I think that the most interesting companies today are the ones where code is an immense accelerant, but in some ways is not the only limiting factor, right? Like, so you have to have some other core insight. It could be about building semiconductors, it could be about accelerating nuclear fusion, it could be about building kind of like autonomous ships, it could be about building better grid

• 55:55Speaker 02

  infrastructure for energy delivery. All of these things will be accelerated by these LLMs and long horizon agents being able to run autonomously. But if your only kind of alpha is in some way spinning up a code to solve, I think, what would feel like a more contained business problem, I think we tend to shy away from those. So I tend to find, but that being said, I think every single founder who is analytical, logical, and kind of driven, has high agency, has strong engine, is able to get much, much further, kind of like, you know, with a small team of three or four people in conjunction with their kind of like AI kind of capabilities than they did kind of a decade ago.

• 56:38Speaker 02

  But I personally think that if you're truly looking to invest in, you know, generational founders, what I'm looking for today is where it's not just the code. Like, you need to have some other kind of like deep sense of like domain expertise where code can be an accelerant.

• 56:53Speaker 00

  Nico, what are you seeing game on the field with this massive efficiency? And you and I lived through it when we saw cloud computing come out and people getting desks at WeWork, right? You took hundreds of thousands of dollars, maybe even a million dollars out of that first year of spend when you didn't have to rack and stack servers and you didn't have to give a half million dollars to a landlord for your letter of credit or whatever nonsense. This seems to be like the next step function down. So what's the game on the field now in terms of that, what I call year zero for a startup? And what's your advice to founders, what to do in year zero?

• 57:29Speaker 01

  I think it's honestly phenomenal time right now. Why is that? Because if you're a freak founder today, in a good way, alongside some of your other freak buddies, with all these AI tools and one round of funding and two months of work, you can make so much more progress than what a year ago you needed.

• 57:53Speaker 00

  It's incredible.

• 57:53Speaker 01

  Two rounds of funding, 10 people, and a whole year worth of work. So what does that practically mean? It means that you raise one round of funding and you can basically skip to like three rounds later, if you're indeed, you know, those kind of freaks. Now, as a DTO thing, and as all four of us know, you need to be very authentic, obsessed, high-slope, learning animal with high velocity. Because if you just are the kind of person, "Oh, I want to be part of the AI renaissance, it's happening in SF, and now with Claude Code, I don't even need the technical co-founder."

• 58:35Speaker 01

  And yes, I'll go to YC startup school and I will pick up my idea there, and a year later I'll be a unicorn? Well, that's not going to work. There's so many grifters out there now, there's so many people who are joining startups just for the status of it. And I'm from Greece originally, I see so many Europeans, even second timers who want to come to SF just to be part of the experience, not because they want to build something huge that they've been thinking about for quite some time. Well, look, if you have the benefit of time, all of us who are experienced, right? If you meet somebody today and you meet them again two days from today, and, oh my God, the pitch sounds so much more refined.

• 59:16Speaker 01

  It's almost like, you know, wine, that they get better, more sophisticated, to the extent that you feel intimidated. "Oh, my God, that person is so scary good, how the hell did they do that?" Or they're 10x engineer like a DTO where the work output is such that you would expect it would take like 30, 40 days for the normal founder, you're impressed. That's if you have the benefit of time. If you don't have the benefit of time, just go back old school, ask them seven times why they're building what they're building, and if they run out of content, probably you know your answer.

• 59:51Speaker 00

  Yeah. The why behind you taking on this crazy mission, Rick, is more important today than ever. Because it used to be, do you have the skill to build this? Can you get the product out the door? Can you get from, you know, speaking of zero to one, I always say zero to one customers, zero to one dollar? Can you make that jump? Because that's the hardest one I find. Now it's something different. It's like, actually, I'm trying to figure out if people are going to quit, will they stick with this? Because anybody can get a couple of customers now.

• 1:00:22Speaker 03

  Yeah, do they have the grit and are they willing to do what it takes? And I think, you know, the people that were able to move the ball down the field, and I think Nico put it well, you know, you want to see people that in between the time you talk to them, you think they're going to move the ball down the field 10 yards, and all of a sudden, you know, they're scoring touchdowns. Those are the people who are exceeding expectations and you want to be part of their journey. Oftentimes, it's hard to track them as they do that before someone else sees it, or they they put so many points on the board, because you want to catch them at that inflection. So the key thing, you know, for us is, you know, are they willing to do things very quickly and are they learning fast? I actually thought Paul Graham had a great point, and one of the non-obvious things he

• 1:01:05Speaker 03

  learned after, I guess, decades now at YC is, how fast do people respond to emails as just a data point? And I've actually really resonated with me after doing this for decades. If people can respond to a question very quickly and very thoughtfully, and you know, you know they're on top of themselves and their business. So if you see, you know, you meet with them, you talk to them about their business, maybe the next day you find out, "Hey, this seems like a competitor, you know, that one of my partners is talking to, what do you think of this business?" And if they don't know it, or they take too long to respond, it's obviously a signal. But the people who, you know, can't sleep at night because they're sweating every part

• 1:01:49Speaker 03

  of their competitive landscape, they're staying on top of their business, and they want to make sure that happens, is incredible, a positive signal. Because as the barriers to start a business have come down, all these entrepreneurs have come in, and you have to figure out how to sort through the people who are going to get from here to there. Because it's, you know, it's one customer, 10 customers is easy, who are the people that are going to get to a million customers?

• 1:02:17Speaker 03

  Sense of urgency, a sense of agency, and a sense of healthy paranoia, that, you know, are they sweating their competitors? Do they, you know, do they hate their competitors? Do they sweat their competitors? And are they willing to do what it takes to get from here to there?

• 1:02:33Speaker 00

  Let's talk a little bit about this OpenAI versus Apple. I don't know if anybody here is an investor in OpenAI. I'm an investor in Apple.

• 1:02:43Speaker 03

  Yes.

• 1:02:45Speaker 00

  I have a lot of Apple shares, I've accumulated over the years, and I'm a huge, huge fan of the company, especially in this new local models on your desktop, which I've been playing with, which I think is going to be crazy next year, when they launch the new Mac Studio, and you know, you got a terabyte on your desktop. And just talk about the best practice, Aditya, of talent moving from one company to another. Your thoughts on this kerfluffle, and then what it means for people who come pitch us after they've left Apple, or Uber, or Meta, or Dropbox, whatever it is, and what they should know when they're working on their side hustle and on their corporate laptop, maybe?

• 1:03:24Speaker 02

  Yeah, I don't know, this is a spicy one, right? I mean, I think that you shouldn't do anything illegal, don't take trade secrets, don't take documents, don't take things that are clearly the property of the company that you work with or to another company, right? But in reality, I think Silicon Valley was founded on the principle that there's very easy ways to go from like one company to another, right? Like, without this malleability of employment, Silicon Valley would not exist today.

• 1:03:53Speaker 02

  I think that it's crazy that you try to stop kind of like essentially companies, you know, great employees to go from one place to the other. And I frankly think that if you're Apple and you're scared that somebody is going to be able to replicate your insane success, I, you know, I probably give $20,000 a year to Apple, right? Between all my phones, my iPad, my services, my, oh, whatever, you know, South Park common spends. If you're worried about essentially somebody being able to replicate that based on like what you think is a trade secret, then that just feels kind of insane to me. I for one would be very glad if there was more competition in the hardware space. And so I think most people carry themselves the high level of integrity.

• 1:04:36Speaker 02

  So in my take here, the, the onus, the burden of evidence here is really on Apple to prove that something wrong happened. Because in all my years of funding people who have left companies, I have almost never seen somebody taking a trade secret and then using that to start something that, you know, I was actually like meaningfully competitive to the company that they left. So I think that the burden of evidence here very much is on Apple is, is kind of my take on it.

• 1:04:59Speaker 00

  I think it's a good take, Nico. What are your thoughts here on what founders should know if, you know, hey, they're leaving their, you know, Google job or their Apple or Microsoft job and what to take with them and what not to take with them?

• 1:05:11Speaker 01

  Look, when you join any tech company or any company in general, you sign a bunch of documents, right? That you're not supposed to take any of the IP with you in the event that you leave anything you invent or you work on stays with the company. Part of the reason of being all of us here in America and doing business here is because people take these agreements seriously and they don't just run around like what's happening in other countries, for example, where people are just copying, pasting the source code. Hopefully, we're not going to destroy that awesome, awesome tradition that we have here. You can't stop anyone. You said it yourself, like we're employed at will by organizations that also employ

• 1:05:54Speaker 01

  us and can let us go for like many, uh, and any reasons. So you can't stop anyone. If somebody wants to leave a company that they're big to go and join another big company or small company, they will do it. Just can't stop them.

• 1:06:06Speaker 03

  Yeah.

• 1:06:06Speaker 01

  We need to accept that.

• 1:06:08Speaker 00

  Super, super simple. Whatever's in your brain can come with you.

• 1:06:12Speaker 03

  Yeah.

• 1:06:12Speaker 00

  Whatever's on your laptop or in your notes does not come with you. So if you kept a moleskin in, of all your meetings or granola of all your meetings or whatever transcript, don't.

• 1:06:22Speaker 02

  Frankly, I don't know. I, I have a strong point of view on this. I don't think that any big company should be kind of like harassing smaller startups with cease and desist and all of these things. And this is, it's just a bad look. It's like, let there be innovation, like let us compete, right? So I think the fact that, you know, Apple is, even though OpenAI feels like a big successful company, they're still kind of a startup. You're not kind of like, you know, one of the biggest companies, the most successful companies in the world. So I think the onus, the burden of evidence, I don't know if Apple has handled themselves with aplomb here, especially given what has come out in the last two days in terms of how they have approached some of the, um, some of the reach outs to the OpenAI kind of like council and stuff like that.

• 1:07:03Speaker 03

  But I mean, I guess as you're leaving a company, the most important asset you have is your integrity. So the last thing you'd ever want to do is have former employers, current employers, maybe worst of all, the public that includes your mom and your dad and everybody else questioning your integrity. And you know what's, what's right and what's wrong. You know what you learned on your job and you know, you know, what's granola that you shouldn't take with you or CRMs that you could rip. And, you know, there's people that we've all worked with who maybe we didn't pursue legal methods, but we knew didn't act with integrity while they, when they left a company. And that's a stain on them and that's a stain on their integrity and that's people we wouldn't work with again. And, you know, if young people who are listening to this, that they, you have to keep that,

• 1:07:48Speaker 03

  that as a north star, that your integrity will always be your most valuable asset.

• 1:07:53Speaker 00

  Wow, that is so well said. Here we are at the end of the program. Let's all go around the horn. What startup did we invest in in the last six months or a year that we're particularly excited about? And we'll give them a little shout out. It's not your favorite in your portfolio. It's just one that's recent that you're excited about, Nico.

• 1:08:11Speaker 01

  We're just very early, uh, here at Riddick because we only got started in the beginning of the year. One that, um, we are really excited about right now is a company called Forge GUI. This is a company that got started by a very young founder, Julia Greco from Texas, who moved to San Francisco. And they're turning every single player from Minecraft and Roblox into a game developer. So in the future, uh, anyone in the world will be able to play their games almost in an Amazon marketplace kind of fashion where anyone can sell stuff and buy stuff. It's early days, but they go to 300,000 users very quickly in just a couple of months.

• 1:08:54Speaker 02

  You know, why pick one when you can say two, right? Um, I'll give you two. Both of them were in the news this week. One of them is Goodfire. The reason I love this company is because there's been a lot of like, I would say discussion around understanding what these AI models are doing, particularly as they go out and they do these long horizon, kind of especially cybersecurity tasks. So Goodfire is kind of the leading AI interpretability lab. And what that really means is that you can go and introspect what is happening in these models. It's no longer has to be a black box. They just released silicone. This was a huge release just kind of yesterday. And you can actually go in and figure out which weights are being activated. Why did the model do something? Why did it kind of choose to like pursue a particular like line of thought? So that's been really well received.

• 1:09:40Speaker 02

  Um, and the second one I'll give you is actually pre-seen. This is somewhat relevant to what we were discussing earlier, which is the world's best AI forecaster right now, which is that for any kind of thing that you might put on a prediction market, it can actually go out and give you forecasts that actually beat the best human super forecasters. And one of the founders turned 35 bucks into almost $2 million on CalShea, just kind of like using this, right? So we have these models, these systems that can do this super forecasting kind of like, you know, um, chains right now, which I find fascinating. So, uh, Goodfire is a little bit further along, pre-seen, we're kind of like early, but they're both seeing a very interesting traction and I'd be very proud of them.

• 1:10:21Speaker 03

  So, um, you know, my, my latest investment, latest announced investment was, you know, slightly different and we still believe firmly in the consumer and the application layer. So we are investors in, uh, overtone networks, which is, uh, Justin McLeod, who was the founder and CEO of Hinge. He sold that business to Match and it's probably the most successful dating app of the last 10 or 15 years. And what they were able to do is basically he's able to rethink about if you were building a dating network from scratch and the idea of a matchmaker using the benefits of AI, finding someone who, you know, the AI is going to know a lot more both about you as well as what, what is a good match.

• 1:11:03Speaker 03

  There are also being, which I think is going to be a trend in AI and LLMs of being audio first. So very conversational in the interaction with your AI matchmaker and figuring out why that works. And I think that, you know, this hits on a lot of trends we're seeing of, hey, AI really doing jobs and not only jobs for enterprises and not only, uh, jobs in building code, but doing jobs in the real world like matchmaking, which is super important. And then, um, you know, this application layer and things that sit on top of models but have a better UI, better UX and better customer experience for everybody. So, uh, you know, we're really excited about that. Justin's a excellent serial entrepreneur built right here in New York.

• 1:11:46Speaker 03

  So, uh, feeling good about kind of the next level of, or next generation of, uh, application layer, consumer startups that's coming out in the market today.

• 1:11:54Speaker 00

  All right. And I will give a quick plug for Micro One, which is doing training data for all of these different AI startups and they have been on a tear. Micro One, great founder, Ali, who, uh, is just one of those incredible, uh, sales motion and sense of urgency founders have ever worked with, Ali Ansari. And Micro One, which we seeded when it was a, but a $12 million company.

• 1:12:22Speaker 03

  Wow, congrats.

• 1:12:23Speaker 00

  All right, everybody. Another great show. I did you. Nico and Rick, well done and we'll see you all next time. Bye bye.

• 1:12:30Speaker 03

  Awesome.

• 1:12:30Speaker 01

  Thank you very much.

• 1:12:31Speaker 00

  Great job.

• 1:12:31Speaker 01

  Thank you.